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Overtime premium, not the whole paycheck

The IRS describes the deduction as the portion of qualified overtime that exceeds the regular rate — the “half” in time-and-a-half — for tax years 2025 through 2028. This calculator does that arithmetic for a standard 40-hour week. Special FLSA rules, such as some public-safety and hospital schedules, can measure overtime differently. Notice 2025-69 discusses those cases.

Or skip the hours and enter the FLSA premium you already calculated. If both are filled, the dollar box is used.

Tips are a separate deduction and are not included in qualified overtime.

Questions

What part of overtime is deductible?

Section 225 defines qualified overtime as overtime pay required by section 7 of the Fair Labor Standards Act that is above the regular rate. On a common time-and-a-half check, that is the “half,” not the straight-time half and not the whole check. Pay above the FLSA premium, such as double time or a weekend premium the FLSA does not require, is not qualified overtime. Qualified tips are excluded.

What are the limits?

The deduction cannot exceed $12,500, or $25,000 on a joint return, for taxable years 2025 through 2028. It is then reduced by $100 for each $1,000 of MAGI over $150,000, or $300,000 on a joint return. A married person must file jointly. The taxpayer’s Social Security number has to be on the return.